Bank of Marine’s third quarter net income was $4.57 million, following strategic moves to reposition its balance sheet in the second quarter and an improving San Francisco office real estate market.
Marin Bank’s parent company (Nasdaq: BMRC) on Monday reported a rebound in third-quarter profit from the previous three months.
The Novato-based bank posted positive quarterly net income of $4.57 million, following a second-quarter net loss of $21.9 million. This is primarily due to investment sales and financing issues.
Banks repositioned their balance sheets and reduced operating expenses to ensure they were back on track.
President and CEO Tim Myers said on a conference call this morning that he was pleased with the bank’s “good results” for the period ending Sept. 30 and said he was “excited that the strong performance will continue.” “There is,” he said.
In a sharp swing in the three months to June 30, the bank incurred charges related to the sale of 56% of the securities in its investment portfolio last month, resulting in an after-tax loss of $22.9 million. . The financial move was part of a strategy to improve future returns by making way for higher-yield investments.
Another contributing factor to last quarter’s loss was an increase in the allowance for credit losses to $5.2 million. The credit loss was related to a $16.7 million loan on a high-rise office property in San Francisco’s Financial District, whose value fell by more than two-thirds compared to the previous quarter.
However, Myers noted on Monday’s conference call that these challenges have been resolved as the outlook for commercial real estate in major cities has improved. Currently, he is “confident in the credit risk trends.” He said the bank had taken a proactive stance.
“We feel a lot better about this,” he later told the Business Journal. “Now we can focus on our efforts. Those are the blocks that will take time to put together.”
Additionally, Chief Financial Officer and Executive Vice President Tani Garton said on the conference call that there are “no new issues.”
Unlike the previous three months, there was no provision for loan credit losses in this quarter.
Additionally, deposits, considered the “lifeblood” of banks’ revenue bases, rose in the three months to September 30. That amount was $3.3 billion, an increase of more than 2% from the second quarter, during a highly competitive period for banks. As customers seek higher yields, deposits increase.
Loans, which are the driving force behind banks’ profit expansion plans, were on the rise. Loans increased by $7.7 million, bringing the third quarter total to $2.0 billion.
“For more than 30 years, we have consistently maintained strong capital levels and liquidity, while carefully managing costs while generating new business and pursuing stronger lending growth,” Garton said in a statement. “
In other financial barometers, net interest income increased to $24.26 million, an increase of more than 8% from the previous quarter. This increase in income, which constitutes the difference between the income from interest-bearing assets and the cost of debt, is due to the favorable reallocation of income assets from low-yield investments to higher-yield varieties, including cash and loans. .
Non-interest income generally derived from fees was $2.88 million, another reversal of fortune compared to the previous quarter’s loss of $29.75 million. This is because gains on sales of investment securities in the second quarter resulted in a net loss.
Non-interest expenses, on the other hand, totaled $20.41 million, a welcome decrease of $1.5 million, which offset the decline in salaries and related benefits. Bank of Marine reported last quarter that a recent restructuring resulted in the elimination of 16 positions across the company, resulting in annual savings of $2.7 million.
Marin Bank, founded in 1990, had assets of $3.77 billion at quarter end. It has 27 retail branches and eight commercial bank branches across Marin, Napa, Sonoma and seven other counties.
The company plans to pay a cash dividend of 25 cents per share on November 14th.
Susan Wood covers agriculture, law, cannabis, production, transportation, banking and finance. She can be reached at 530-545-8662 or susan.wood@busjrnl.com.
